MNI INTERVIEW1: China May Still Grow Near 6%, Advisor Says

--State Council Counsellor Liu Sees Unprecedented Challenges to Growth

--FY Growth Won't Break Below 5%, Higher If Outbreak Contained

--Part 1 of 2-Part Interview

     BEIJING (MNI) - China can still achieve economic growth of around 6% this

year if the coronavirus outbreak is contained by the end of March and the

government takes quick action to boost business activity, Liu Huan, a counsellor

to the State Council, said in an interview with MNI.

     Full-year growth "is not going to fall through 5%," even as the economy

faces "unprecedented" challenges in Q1, and perhaps further into the year, said

Liu, who was appointed as an official advisor to the government in 2011 and is

the vice dean of the School of Taxation, Central University of Finance and

Economics, as well as deputy director of the economy committee of Beijing's

Chinese People's Political Consultative Conference.

     Some government targets may have to be amended, he added.  

     The government now recognises that some tough measures taken to prevent the

spread of the virus, including keeping businesses shut, were excessive, Liu

said, adding that officials had to target both the continued fight against the

coronavirus outbreak and restoring full economic production.

     "If production can't get up-to-speed, the economy will collapse in a couple

of months," Liu said by phone on Wednesday.

     "It is concerning how long the businesses can last as the turning point of

the outbreak hasn't arrived," Liu said, noting uncertainty will cause a bigger

impact on the economy.

     --WORSE THAN SARS

     The coronavirus outbreak's impact on China's service-dominant economy will

be greater than that caused by SARS in 2003, when China had just joined the WTO,

was enjoying low-labour advantage and when manufacturing was the main driver,

Liu said.

     Businesses involved in efforts at combatting the epidemic, such as

manufacturers of masks and medical supplies, will lead the recovery, Liu said.

Judging by the experience following the 2003 SARS outbreak, which had less

impact than the current epidemic, consumption, including tourism, transportation

and dining should see "a big rebound" as consumers will likely celebrate being

able to go out again, he said.

     The online economy, including e-commerce, distance education and working

from home, has received a boost with so many people trapped indoors, and

authorities should "grab this opportunity" to boost quality and efficiency of

the economy, Liu said.

     "The recovery could occur fairly quickly," Liu said.

     Liu conceded that fiscal gaps will "very likely" increase given that last

year's tax and fee cuts had already created "huge" revenue difficulties, while

fighting the virus and infrastructure programmes will require higher spending.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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